An informal audit conducted by the city of Selma of the St. James Hotel for the first three weeks of October revealed several accounting “improprieties,” according to Selma City Treasurer Ronita Wade.

Wade met with hotel management in January and earlier this week to review the hotel’s finances and presented her findings to the Selma City Council this Tuesday. The city owns the St. James but has contracted with Strand Management in South Carolina and Atlanta to run day-to-day operations.

Wade and hotel general manager Darryl Carter reviewed sales receipts for the first 19 days of October.

“It was enough to capture and see there are some improprieties taking place,” Wade said. “During this review process, I was able to ascertain that there are several major issues regarding record keeping and management of the revenue from the St. James Hotel,” Wade said.

Some of the issues Wade discovered were:

•Cash deposits did not match cash receipts from daily sales reports. In most instances, deposit receipts were “much less” than was reflected on sales reports.

•Cash deposits were not made in a timely manner.

•Credit card receipts were missing.

•Customers were given refunds on credit cards for which receipts for initial charges couldn’t be found.

Wade said one customer with a two-night stay was refunded $600, but no receipts could be found to show he or she was charged that amount.

“Mr. Carter was unable to explain missing receipts, lack of deposits in comparison with cash reported on the daily sales report as well as other inconsistencies,” Wade said.

Hotel management also has not been sending sales tax to the Alabama Department of Revenue, according to Wade.

“An accountant with Strand stated that they have not sent payments to the state of Alabama Department of Revenue on behalf of the St. James Hotel because the payments sent previously had been returned due to incorrect account information,” Wade said. “I have requested information on the amount outstanding but have received no response.”

There are also questions about insurance, payroll and unpaid invoices from Paramount Linen Rental Services, according to Wade.

“These are just a few things, issues I’ve ran into in working with the management company,” Wade said. “[It’s been] difficult in getting information we need to ensure things are operating smoothly. We’ve been in conversation back and forth and there’s always a delay or something that is excluded.”

Messages left for Carter at the St. James weren’t returned Wednesday. Strand’s Chief Financial Officer John Johnson said the company wasn’t corporately aware of any issues at the hotel.

“We are not aware of this report. We are going to follow up with Ms. Wade in the morning,” Johnson said. “Our company is committed to giving them whatever information they want.”

Johnson said Strand tried to reach Wade on Wednesday but was unsuccessful, but that the company has a number of controls in place for accounting.

“We haven’t received any notifications from the city,” Johnson said. “It’s hard for us to comment when we don’t know the issues.”

Strand’s local staff has been working with the city and would continue to do so, according to Johnson.

“The city is entitled to be able to pull those records,” Johnson said. “We are quote willing to provide them those.”

He also said he was aware of the sales tax issue and that the company and city were working to resolve that.

“I know our staff has been working with her regarding that,” Johnson said. “Some of those issues were in place prior to us.”

Wade recommended the city hire a forensic auditor to review the hotel’s accounting since August.

The city of Selma’s contract with Strand says the city would pay $4,000, or 3 percent of gross revenues, whichever is greater to Strand for managing the hotel. The city has been paying that plus additional expenses that total approximately $20,000 each month.

The council voted Tuesday to pay another $20,000 to cover February’s expenses. Angela Benjamin, Bennie Ruth Crenshaw, Susan Keith, Sam Randolph and B.L. Tucker voted in favor of the funding, while Greg Bjekle and Cecil Willamson voted against it.

“This is insanity,” Willamson said.

Several of the council members said the St. James had to be kept open through March’s Bridge Crossing Jubilee.

“I do think it’s something we really need to look at after the Jubilee. We may need to get out of the hotel business,” Crenshaw said.

Benjamin noted the city’s contract with Strand includes a 90-day opt-out. She said putting in a notice now to cancel the contract would cover the city through the Jubilee and into May.